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Ammonia Signals Downturn

January 8, 2013
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

Pricing of Urea, Anhydrous Ammonia, MAP and DAP are all beholden in some way to the price of ammonia as a feedstock. So far, high ammonia pricing has held N&P pricing hostage in this post-application season. That has meant higher pricing for Anhydrous in particular, but also for phosphates, Urea and UAN.

Part of the holdup is in Egypt where infrastructure and labor are making it difficult to cultivate ammonia and export Urea. These and other pressures are reported to be easing, and ammonia is beginning to flow again. Domestic DAP inventories are on the increase and production has slowed to help mitigate an inventory overhang. As the spring application season approaches, DAP and MAP producers will likely ramp up production to keep pace with demand and with ammonia as a feedstock showing signs of decline in world markets, expect phosphate pricing along with Urea, UAN and anhydrous ammonia to ease.

At present, experts and technical data agree that ammonia pricing has found resistance and should come down, or at least move sideways. Eventually, as downstream outlets resupply and seasonal demand increases, the parallel increases in production should increase downward pressure on late winter N&P pricing.

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